India rejects Apple’s key demands on tax incentives

Sources aware of the company’s proposals, said the first plant being set up by contract manufacturer Wistron, which will assemble iPhones in Bengaluru, will not get affected as the concession demands do not pertain to this plant.ET Bureau | March 23, 2017, 08:57 IST

NEW DELHI|KOLKATA: India has not accepted 'most of the demands' on tax incentives that Apple Inc. had sought for establishing a manufacturing base in the South Asian nation, a senior official said, shifting focus to the rejection’s fallout on the iPhone-maker’s local assembly plans.

Sources aware of the Cupertino, California-based company’s proposals, however, said the first plant being set up by contract manufacturer Wistron, which will assemble iPhones in Bengaluru, will not get affected as the concession demands do not pertain to this plant. “Apple India has sought concessions, including duty exemptions on manufacturing and repair units, components, capital equipment including parts and consumables for smartphone manufacturing and service/repair for a period of 15 years,” Commerce and Industry minister Nirmala Sitharaman said in a reply to a question in Parliament. On whether the government has accepted most of the demands, Sitharaman said "No".

Apple declined to comment on this development.

India has earlier said that it is not possible to give exemptions to individual companies, especially as the Goods and Services Tax (GST) takes effect later this year, replacing a complex and tiered indirect-taxation structure.

“There is no way we can give individual exemptions under the GST regime,” Revenue Secretary Hasmukh Adhia had told ET. Apple’s vice president of operations Priya Balasubramanium met Adhia on Wednesday, to discuss Apple's plans in India, a person aware of the meeting said.

Apple had sought the concessions from the government to incentivise the high-end component manufacturers of iPhones to move to India as without their presence, it will be difficult for the iPhone maker to start full-fledged manufacturing operations locally. Apple sought a series of exemptions pertaining to import duties on components and equipment besides exemption from the mandatory 30% sourcing norm.